Chairman Park Sung-taek of the Korea Federation of SMEs (KBIZ) speaks at an emergency meeting on a raise in the minimum wage on July 16.

The Korea Federation of SMEs (KBIZ) requested a review of a decision to raise the minimum wage to next year to the Ministry of Employment and Labor Affairs (MOEL) on July 26.

The move followed the request of a similar reexamination of the decision by the Korea Employers Federation. The Korea Federation of Micro Enterprises (KFME) raised objections to the minimum wage hike for next year to KBIZ. The KBIZ maintained that the minimum wage hikes for next year should vary according to each business. The minimum wage hike was done without considering guidelines, the federation said.

 
In particular, KBIZ said the minimum wage hike was decided without considering employers’ ability to pay the minimum wage, and the confederation requested a review of the decision of the minimum wage hike for next year, demanding the calculation basis for a 10.9 percent wage hike.

In the objection, KBIZ said the Minimum Wage Committee should have considered its “application according to business classification,” one of the three discussion subjects, in accordance with their legal basis.

The committee had not any discussion on labor productivity, one of the three guidelines for determining minimum wages, the federation said. Explaining the rationale behind the objection, KBIZ reasoned that for the past 17 years, SME manufacturing companies saw an increase of minimum wage 2.02 times faster than those of labor productivity.

The federation insisted now that the minimum wage has exceeded an equivalent of 63 percent of middle-level wages, forcing a high increase would cause such problems as personnel expense hikes, a decline in the competitiveness of the export manufacturing industry, the exacerbating of manpower shortages among SMEs, friction among laborers, and a drop in labor productivity. Overall, it would deal a severe blow to SMEs and micro enterprises.

Lee Jae-won, head of the Manpower Support Division at the KBIZ, said even through SMEs and micro enterprises, raised objections all year since the minimum wage was raised. He said the views of industries should have been reflected. The minimum wage should vary according to each business classification to ensure their economic stability.

The tripartite minimum wage committee held the 15th general meeting at the Sejong Government Complex on July 14 and approved a plan to raise the minimum wage for next year to 8,350 won per hour, a 10 percent jump over that for this year. It is the first time the minimum wage has been raised above the 8,000 won barrier.